Growing Your Business Through Digital Marketing
How To Calculate The Lifetime Value Of Your Customers
September 23, 2019
Do you know how much your customers are worth to your organization? Do you know how much money you can spend on your company to acquire new customers? Let's talk about Customer Lifetime Value or CLV. It is the most important metric to get your head around if you're going to do effective digital marketing or any digital marketing for that matter. In this episode, we will explain what CLV, how you can calculate it for your business and we also give you five tips to increase repeat customers and lifetime value.
Do you know how much your customers are worth to your organization? Do you know how much money you can spend on your company to acquire new customers?

Let's talk about Customer Lifetime Value or CLV.

It is the most important metric to get your head around if you're going to do effective digital marketing or any digital marketing for that matter.

We will also give you five tips to increase repeat customers and lifetime value.

Knowing your CLV will help you answer three fundamental questions for your business:

1️⃣ Are you paying enough to acquire customers from each marketing channel?
2️⃣ Are you acquiring the best kind of customers?
3️⃣  How much can you spend on keeping them sweet with email, social media or other ways of delighting your customers

Finding answers to these questions will help you focus on and grow your business. And when your business is growing, and you start to get different in house teams.

Product, marketing, advertising, and sales teams can use CLV to calculate how much to spend on acquiring new customers, retaining existing customers, and their ROI on marketing campaigns.

So how do you calculate your CLV?

There are a couple of different ways to calculate this.

Some more complex, that takes into account things like churn rate, discount rate, contribution margin, retention costs, etc.

Some less complex.

We're going to look into calculating CLV for your e-commerce business:
(Avg Monthly Revenue per Customer * Gross Margin per Customer) ÷ Monthly Churn Rate 

Let's look at how to increase the lifetime value of your customers.

1️⃣  - Offer Great Service and Great Customer Experience:
You increase the likelihood of people working with you again and wanting to return to either get your service or get your product another time.

2️⃣ - Stay On Their Radar:
97% of people that go to your website or interact with your brand for the first time don't convert.   It doesn't mean they aren't the right customer or they're not a good fit for your business. It just means they're in a different spot in the sale funnel. Maybe they're just researching.

If you follow up with them and stay on their radar using retargeting ads or any of the other myriad of marketing opportunities out there, you're able to keep that top of mind awareness and you're able to follow the Marketing Law of 7.

3️⃣ - Automate Your Processes:
The last thing you want to do is spend all this time money and energy in driving people to your website, getting them to fill out a lead form, or maybe they made a purchase, and then they completely fall off your radar, and you never talk to them again! Set up some automated process with email automation and with CRM lists, and you can develop a funnel to continue nurturing these customers, so they come back to you when it's time for their next service or product.

4️⃣  - Ask For Referrals:
If you aren't asking for referrals, you're relying on luck. You need to give your customers an opportunity to brag about you. They've already taken that risk. Now you've developed a trust relationship with them so give them an opportunity and an incentive to brag about their decision to their friends and their family. It's a great way to generate new leads.

5️⃣ - is to thank them and follow up
You need to say thank you! Appreciate the fact that they're spending their hard-earned money with you and recognize that.

Remember it costs five times more to generate a new customer than it does to keep an existing customer.

👉 If you need help growing your business check out our ad agency User Growth @ https://usergrowth.io/
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👉 Read more tips on our blog: https://usergrowth.io/blog/customer-lifetime-value/